BENEFICIAL OWNERSHIP 2.0 RULES STILL UNCLEAR FOR FINANCIAL INSTITUTIONS BY KATIE KENNEDY, CFE, CUCE, SENIOR MANAGER, WIPFLI TThe U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) issued a final rule on Sept. 30, 2022, regarding beneficial ownership reporting requirements, implementing Section 6403 of the Corporate Transparency Act. The rule will be effective Jan. 1, 2024. Its intent is to crack down on illicit finance, support law enforcement efforts and increase transparency with regard to the persons who own or control a company. The ruling would require certain corporations and limited liability companies to file beneficial ownership information directly with FinCEN, which will maintain a national beneficial ownership information (BOI) database. The new ruling varies from the requirements currently in place in that it is aimed at collecting beneficial ownership data on U.S. entities with fewer than 20 full-time employees, no more than $5 million in gross annual receipts, and at least one office physically located within the U.S. It is also different in the timing of the data collection. BROADER REQUIREMENTS Under current requirements, beneficial ownership data is collected at the formation of an account with updates based on defined triggering events going forward. The new requirements call for the collection of this data within 30 days of the inception of the business for entities formed after the effective date of the rule and require initial reports for entities formed prior to the effective date to be filed within one year of the effective date. Updates will be required within 30 days of a change to the information that had previously been filed with FinCEN. The final rule defines two components of beneficial ownership (much in the way the current rule does): ownership interest and substantial control. Ownership interest is defined as ownership of at least 25% interest in a reporting company. Under the new rule, there are three components of substantial control: • Serving as a senior officer of a reporting company • Having the authority to appoint or remove a senior officer • Having substantial influence (i.e., the ability to direct, determine or decide important matters affecting the reporting company) Each of the applicable beneficial ownership parties identified would have to provide FinCEN their name, birthdate, address and a unique identifying number from an acceptable document, including the image of the document. Once the required information is provided to FinCEN, the individual reporting their data could obtain a FinCEN identifier that can be used in subsequent BOI reports in lieu of providing the required information to the party completing the report. GUEST ARTICLE 20 Community Banker
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